Proceedings of the Standing Senate Committee on
Transport and Communications

Issue No. 2 - Evidence, April 20, 2016

OTTAWA, Wednesday, April 20, 2016

The Standing Senate Committee on Transport and Communications met this day at
6:45 p.m. to continue its study on the development of a strategy to facilitate
the transport of crude oil to Eastern Canadian refineries and to ports on the
east and west coasts of Canada.

Senator Dennis Dawson (Chair) in the chair.

[Translation]

The Chair: Honourable senators, I now call this meeting of the
Standing Senate Committee on Transport and Communications to order.

[English]

Today the committee is continuing a study on the development of a strategy to
facilitate the transport of crude oil to Eastern Canadian refineries and to
ports on the East Coast and the West Coast of Canada.

[Translation]

One of the objectives of our public meetings is to study how to best spread
out the risks and the benefits throughout Canada.

[English]

I would like to welcome Alan Ross, Partner, at Borden Ladner Gervais LLP. Mr.
Ross is a partner in the Calgary office and has co-authored articles on this
issue and issues dealing with pipelines.

Alan Ross, Partner, Borden Ladner Gervais LLP: Good evening. My name
is Alan Ross. I'm a partner in the national Canadian law firm Borden Ladner
Gervais LLP and the incoming managing partner of its Calgary office. I was
called to the bar over 20 years ago and have specialized in regulatory and
administrative law with a focus on the energy sector for most of that time.

By way of background, my practice includes work on behalf of pipeline and
midstream companies, including energy infrastructure approvals and rate
regulation. I've appeared before the National Energy Board multiple times as
well as provincial energy regulators throughout the country.

[Translation]

In 2013 and 2014, I was seconded to the Government of Alberta, where I held a
deputy minister position. In the context of federal-provincial relations, I was
responsible for developing market access policies for energy, and for
implementing a Canadian energy strategy, which included considering issues
related to climate change, environmental assessments and relations with
indigenous peoples.

[English]

It certainly is a privilege to be here with you. And, in response to the
Senate's invitation, I make this appearance in my own right, and my submissions
are not made on behalf of any client or other organization.

These opening statements are focused on the notion of social licence in major
project development generally and, in particular, new energy pipelines in
Canada, including strategies to facilitate the transportation of crude oil to
tidewater.

[Translation]

The three main questions that have a direct bearing on infrastructure,
natural resources and energy transportation are as follows. First, what does the
expression "social licence'' mean? Second, why is social licence a factor in
facilitating the expansion of energy infrastructure in Canada? Finally, what is
the federal government's role in securing social licence for new pipeline
projects and for the transportation of oil?

[English]

With respect to the first question, what exactly is social licence, at its
essence social licence is the demand on and the expectations for business
enterprise that emerge from neighbourhoods, environmental groups, First Nations,
communities and other members of surrounding civil society. It is not a literal
licensing arrangement but rather a metaphor to encapsulate values, activities
and ideals which companies must espouse and indeed governments must follow
within society to ensure successful operation.

Social licence issues have become part of any sophisticated corporate risk
management strategy. The need for a social licence to operate is even more
important in sectors with highly visible business activities, long-term
horizons, high exposure to global markets or a wide range of stakeholders keen
to influence business. The pipeline industry in particular meets each of these
criteria.

[Translation]

Of course, the concept of social licence attracts major criticism. For
example, it is argued that the term is not well defined, that it is not covered
by law or by regulations, and that it is simply a delay tactic. To put it
bluntly, there is no office of social licence.

[English]

Turning to the second question of why social licence is relevant to
facilitate energy infrastructure development in Canada, historically federal or
provincial regulators adjudicated on pipeline projects using general public
interest tests enshrined in governing legislation. Pipeline developers could
rely on positive regulatory decisions as the primary licence needed to proceed
with the development of their projects. And that was certainly the case when I
started off in this practice 20 years ago, and I would say it remained so up
until the last four or five years and the Northern Gateway experience involving
the National Energy Board.

Many stakeholder groups, which increasingly include special interests, or
entities not directly impacted, are increasingly lining up against pipeline
developers and their proposed pipelines. Many of these stakeholders suggest that
a traditional regulatory licence is no longer enough and that a social licence
must also be obtained from a broader stakeholder group before a new pipeline can
be built in Canada.

The result is that some pipelines are going undeveloped not for the lack of a
legal licence but rather for the lack of a social licence. Fundamentally, the
rise of the social licence phenomena respecting pipelines is rooted in a growing
lack of public confidence and trust in government authorities to regulate
business. And this is where the quest for a social licence by pipeline
developers interacts with government policy and highlights the role of
government in the social licence debate.

[Translation]

I will now turn to the third subject of my remarks, namely the role of the
federal government in securing social licence for new pipeline projects and for
the transportation of oil.

[English]

In the current climate for pipeline development, companies are generally
viewed as responsible for obtaining social licence. The role of government is
sometimes obscured in that debate. However, governments, as both regulators and
recipients of a share of resource rents, have an important role to play.

Both federal and provincial governments' role in the social licence debate
arises from their powers to exercise reasonable control over persons and
property within their jurisdictions respecting security, environment, health,
safety and welfare, among other interests.

The federal government can address social licence by improving regulatory
processes that exist to ensure public trust. Alternately, governments and
regulators through legislation, public policy or ensuring public trust in
institutions can facilitate social licence and the public acceptance necessary
for new energy projects. Specific examples of the government's role in the
social licence debate are things like mandated corporate social responsibility
and enhancing robustness of a public interest test for project development.

In conclusion, social licence is largely untested as a regulatory concept but
can be considered a form of regulation by drawing from market forces and norms
that encourage certain types of behaviour.

[Translation]

It is very interesting to note that Canadian courts and certain Canadian
energy regulators rarely make reference to the notion of social licence. At
least, not yet.

[English]

It is nonetheless a de facto form of regulation because there are
consequences for failing to comply with social licence conditions, such as
reputational damage, delay or ultimately preclusion of a natural resource
project. While it does not establish a new legal or regulatory requirement,
social licence can push the boundaries of existing ones, such as the National
Energy Board's public interest test.

The federal government therefore clearly has a role in the social licence
debate. What will be required is a meaningful intersection between regulation
and social licence. This may help ensure that a pipeline company does not find
itself with a National Energy Board pipeline approval but without the ability to
construct and operate that pipeline.

Moreover, it can serve to ensure that Canada itself does not become little
more than an energy superpower in waiting, as pipeline developers struggle to
reconcile these social and regulatory issues.

Thank you very much. I'm open for questions as you wish.

The Chair: Thank you, Mr. Ross. Before I give the floor to my deputy
chair, I would like to introduce the members of the committee.

Senator Unger from Alberta, Senator Doyle, from Newfoundland and Labrador and
Senator Tannas from Alberta.

Senator MacDonald: Thank you, Mr. Ross, for your presentation.

You say the federal government can address social licence by improving the
regulatory processes that exist to regain public trust. Can you expand on that?
If you were to recommend to the federal government or to suggest to them what
they should do, is there something they're not doing that they should be doing
to address this?

Mr. Ross: I think I would, among other things, take a look at four
fundamental areas. The first thing I would take a look at is an expansion of the
notion of corporate social responsibility and being able to enforce it through a
regulatory system. A good example of that is a recent determination by the
National Energy Board that companies have to provide their emergency response
portfolios, and I think that there could be a good dovetailing between the
increase of corporate social responsibility requirements at the regulatory level
and indeed what's happening at the board at the corporate level.

Increasingly we're seeing greater and greater levels of corporate social
responsibility, CSR, if you will, board members, people with those backgrounds
going on corporate boards, and I think there could be a regulatory dovetail with
some of what's happening at the corporate level. That's first.

Second, I think one thing that could help the existing process is a
redetermination or a revision of what the National Energy Board's public
interest test is. This is set out at section 58 in particular and Part 3
generally of the National Energy Board Act.

There has been significant confusion as to what the notion of public interest
is and what it applies to, and I think some clarity around that may be helpful
in determining social licence.

Third, as we look back at some of the changes that took place to the
regulatory framework going back from 2012 to 2015, there was a reduction, and I
think the intention was probably right, in order to try and facilitate pipeline
development and major project development, but there was a reduction in the
ability of parties to be heard — the very legal notion of audi alteram partem
— and I think what happened in particular was a streamlining of process at the
National Energy Board project approval level whereby it limited the ability of
parties to be heard in that process to a more narrow, directly affected
threshold. I think an expansion of the ability of parties to at least be heard
in the process would be helpful.

Fourth, and finally one of the things I would take a look under the current
legislative framework, again, put in place between 2012 and 2015, was the
deferment to a cabinet approval process for a lot of pipeline development and in
particular major project development. As I understand it, that continues to be
the policy of the new Liberal government as well.

To me this creates a potential politicization of the National Energy Board
process, and having a re-examination of that may well facilitate the notion of
social licence. We can talk about what social licence may or may not mean, but
if you get social acceptability, then the ability to have parties who are in
front of the National Energy Board feel they're not part of a politicized
process would probably help to achieve social licence.

Senator MacDonald: When it continues to the arguments about social
licence, my perception is that most people who bring up the issue of social
licence are using it to stop pipelines because they want to stop bitumen from
flowing. But bitumen flows. Bitumen goes by train or by truck. It still gets to
market.

You say that you require a meaningful intersection between regulation and
social licence. This may help to ensure that a pipeline company does not find
itself with an NEB pipeline approval, but without the ability to construct and
operate that pipeline.

We've had pipelines in the country for 75 years. If they have NEB approval,
why wouldn't they have the ability to operate and build a pipeline?

Mr. Ross: From a purely legal context I think you're absolutely right.
Once you get you National Energy Board approval and all the other approvals that
you need, either from a federal level, vis-à-vis environment, for example, or at
a provincial level, the provincial environmental approvals or municipal
approvals, you have the legal ability to go out and build your pipeline, to
construct and operate, no doubt about that.

However, increasingly there is such significant pushback from what I would
call extra-jurisdictional or extra-legal forces, which are part and parcel of
the notion of social licence, and they represent a whole bunch of forces. They
represent everything from environmental activist groups all the way through to
provincial governments, like the British Columbia government did with its five
requirements with respect to Northern Gateway, which the Ontario and Quebec
governments have done to a certain extent, and so you have various parties in
the process, everything from protesters to provincial governments, lining up as
part of that opposition, if you will, delay to try to get major projects built.

I think you are quite right that in a legal capacity you're able to build,
construct and proceed, but operationally one may not as a pipeline developer,
and we've seen that in various pipeline approval processes. Northern Gateway is
a good example of that. Energy East may well be another example of that. Line 9
has had elements of that as well. That's the Enbridge project through Ontario.

Senator MacDonald: I would like your observations on this: The
railway, the Rideau Canal, the St. Lawrence Seaway — do you think we could build
them today if we had to wait for social licence?

Mr. Ross: I think you'd have a very tough time building today. I think
part of the reason they got built, aside from being in a different era, was
because they were defended and promoted perhaps as matters of national interest.
And I think that today there is a significant amount of provincial interest,
local interest, special interest group interest, but fewer and fewer defenders
of the national interest for infrastructure build in a way that I would think
would make it tougher perhaps even if not impossible for those major
infrastructure projects to be built.

Senator MacDonald: I just want to make one last point: You have a
defender of the national interest here. Thank you.

The Chair: He's on the record with that, now.

Senator Mercer: Thank you for being here, Mr. Ross. With respect to
the national interest, I would suggest that the moving of a product from Alberta
and Saskatchewan to tidewater is in the national interest. It's important to us
that everyone be able to get their products to the market, if we were to say
tomorrow that we were going to leave all the lentils in Saskatchewan because we
don't want them go by train to Vancouver to be shipped overseas.

I only had one question, but as you continued to talk I kept scribbling notes
here. My question was with respect to social licence: Has the need for social
licence on this been somewhat removed if it's presented properly? I would
suggest it's not being presented properly. With the tragedy at Lac-Mégantic,
have we not removed some of the need for social licence in that it's recognized
that pipelines are a lot safer than trains, and we only needed one tragedy to
prove that? Unfortunately, many people lost their lives due to that. Do you see
that argument as being viable?

Mr. Ross: I certainly do see your argument, but I do think there is
still significant opposition to pipelines, if for part of the reason that
Senator MacDonald suggested, that there are a lot of people that want to keep
oil and bitumen in the ground. That may well be their modus operandi no matter
what. I think we still have quite strong opposition to pipelines, and we're
seeing that come through in the Energy East proceedings which, as you know, are
kicking off; today was the last day for participants to indicate they are going
to be active. I think there still is a significant need to address the social
licence concept.

Senator Mercer: This may be the first time, but hopefully not the last
time, that I agree with Senator MacDonald. I really do believe that many of the
opponents of pipelines are not opposed to pipelines but are opposed to taking
oil out of the ground. We've got to learn to separate those things.

[Translation]

Senator Boisvenu: Mr. Ross, thank you for being here, and I
congratulate you for the quality of your French.

My first question relates to your experience and mandate as deputy minister
in 2013-14. I understood from your resume that you worked on indigenous issues.
Have you observed any change in attitude since that time in terms of social
licence for oil development or transportation in those communities?

Mr. Ross: That is a good question.

[English]

I think that there have been some changes with respect to the status of the
law during that period. We've seen the
Tsilhqot'in decision, among aspects from the Supreme Court, reinforcing
the need for consultation requirements. I think we've seen a reinforcement of
the fact that there has to be a need to connect our First Nations communities
with our natural resource development in this country.

One of the areas that maybe has evolved, even in that time frame, is a bit of
a refreshed view — and I would view this positively — on the ability for First
Nations to be involved in equity stake types of opportunity and to be engaged
financially. Not necessarily through direct payments — although that's part of
it — or access or impact benefit agreements, but through some further discussion
on how to engage financially First Nations groups in natural resource
development.

I would say, in that context, that I think there can be a role for the
government to play in things like potentially taking on a role in reinforcing
the ability of Aboriginal groups to tax not only property but be able to tax
natural resource development in a way that is financially creative. There is a
history, at least in the federal government, of discussing how to make capital
accessible to First Nations groups, and that goes back to the Mackenzie Valley
experience and Justice Berger's review way back in the 1970s.

I think that the ability to provide access to capital or facilitate that,
potentially through backstop agreements or financial guarantees at the federal
level, has probably been discussed more over the last couple of years.

To sum up, there are two areas: One, we're seeing a reinforcement at the
legal level of the need to consult, very much after the Tsilhqot'in
decision; and second, a broader discussion about creating the opportunity for
capital for equity investment, with or without government involvement.

[Translation]

Senator Boisvenu: Are relations with indigenous peoples more difficult
for the natural resource companies or for regional or provincial governments? Is
the government-community relationship different from the company- community
relationship?

[English]

Mr. Ross: I think that it is. One thing I find very interesting is how
different our First Nations communities are straight across the country with
respect to natural resource development. I come from the Alberta experience,
where there has actually been a reasonably good — quite strong, in many cases —
working relationship between natural resource companies and First Nations.

For example, we've seen strong impact benefit agreements, and we've seen very
good examples of subcontracting to Aboriginal groups. Alberta has the benefit,
of course, of being somewhat more settled in terms of its treaty obligations
vis-à-vis Treaty 8, whereas other parts of the country — B.C. in particular —
are more unsettled, frankly, in terms of their treaty obligations.

I think part of it, to your question of what are the dynamics between
corporate versus political parties and regions of the country, is that one of
the most important is probably regions of the country and the desire of First
Nations groups to be commercially involved or to oppose, as is more the case in
British Columbia.

[Translation]

Senator Boisvenu: Have you followed the debate in Quebec over the
Energy East pipeline?

[English]

Mr. Ross: Yes, I have. Not from a professional level but from a media
level. I did follow, for example, the proposed litigation on environmental
matters involving the Quebec government. I followed with interest the potential
role of the BAPE with respect to the jurisdictional aspects of what it may do in
Quebec, and then some of the media with respect to opposition to the terminal at
Cacouna, which then of course was a pivot to Saint John.

[Translation]

Senator Boisvenu: I see that you have followed it closely. How could
the federal government get involved in this file, when the mayor of Montreal is
against it?

Certain small groups oppose the project, but they are targeting oil
exploitation rather than transportation. Their objection to the pipeline is
simply a means of demonstrating their opposition to the exploitation of the oil
sands. However, when a mayor as powerful as Mr. Coderre opposes the project, how
can the federal government get involved in what I would describe as a sort of
Pandora's box? I'm trying to understand how the federal government could get
involved in this project to facilitate the obtention of social licence.

[English]

Mr. Ross: By its nature the federal government is involved. The
National Energy Board has jurisdiction over an interprovincial pipeline, so in
that capacity the federal government is there, and they have to be there.

But to your specific point, part of the issue is to what extent the federal
government becomes a cheerleader or supporter of a pipeline, and we had recent
experience of that in this country. We've had it with Northern Gateway and,
albeit in a different context, with Keystone XL, and I would submit that there
are probably some dangers in the federal government becoming a proponent of a
pipeline because they may well get cross-threaded with their regulatory
obligations as an arbiter, if you will, of whether to give approval or not to
that pipeline through the National Energy Board.

All of that said, I think that there are probably things the federal
government can do in the overall context of discussing pipelines and the overall
context of discussing our energy resources in this country in a way that, for
example, promotes education about what the economic benefits of natural
resources development are to this country, straight across the country.

One might look also, for example, to something like the Canadian —

[Translation]

Senator Boisvenu: Do you believe that the public has been made
sufficiently aware of the economic benefits generated by this industry in
Canada? I sometimes get the impression that the federal government does not play
a major role in this area. I wonder if my perception is accurate.

[English]

Mr. Ross: There is probably more from an educational perspective that
the federal government can do in terms of speaking to what our energy resources
mean to the country and our overall economic base. I think there are things the
federal government can do as well on a factual basis by speaking about the
environmental protections we have at both the federal and the provincial level,
namely, that we do have a strong regulator and processes in place, that among
the world's major energy producers Canada, by any measure, is at the top of that
list in terms of environmental protections, operational safety and a robust,
regulatory process. I think those things are lost.

There are probably two things the government can do from an educational
perspective. One is to speak a bit more about the role of natural resources
within the country and what it means, but equally speak to our processes for the
development and transportation of it. In that context, I might point out
something like the Canadian Energy Strategy concept. This was brought forward
mostly by the provincial governments rather than the federal government. It
spoke to Canada's energy diet and Canada's energy production as a broader whole
to say energy isn't simply an Alberta issue, or an oil sands issue, or a bitumen
issue. We have an energy issue that takes into account run-of-river in British
Columbia or renewables in Quebec, for example, and we view our overall energy
economy in a broader sense and take from that how important it is in a broader
sense rather than single out bitumen, oil sands or other aspects of energy
development specifically.

Senator Tannas: Mr. Ross, I know you have spent a lot of time thinking
about social licence. You have been sideswiped by it in the early stages, and
you are seeing it develop. Do you think about what happens if social licence
isn't achieved and that is where the pipelines all flounder? Do you see that as
being the momentum that has those folks next declaring that social licence has
been lost to transport crude oil by rail? Is that a scenario that you worry
about?

Regarding this concept and these issues in other countries, have you seen
emerging examples of good things or bad things that you might want to comment
on?

Mr. Ross: To your first question, one of the concerns I have is a bit
of what we have have seen in existing projects — Northern Gateway is a good
example of that, among others in the country.

For the record, social licence is not simply a pipeline or an oil and gas
issue. It applies to the mining industry, to roadways and to all sorts of major
infrastructure development and major resource development.

To your point, one of the biggest concerns I have is the notion that social
licence has won out because it hasn't been accepted or approved and is part and
parcel of do our processes work or will we be mired in delay. Will we be mired
in a regulatory process that is dysfunctional? Are we unable to tap into the
economic resources of this country because we are unable to build anything? To
me, that is where the rubber hits the road on the social licence question.

To your point on whether we are seeing interesting things in other countries,
Canada is such a unique country because we have a variety of different
interests. We are quite regional in nature. Our provincial and federal system
works in particular ways jurisdictionally, and we have a fair bit of energy and
natural resources that we have to get to tidewater over a fairly long distance,
which makes some of the risks and benefits of it disproportionate or viewed
disproportionately throughout the country or challenges us to have a solid
national interest or initiative to bring our resources to market.

One of the countries that have done some interesting work — and this is to
Senator Boisvenu's point — is Australia. They have taken a number of initiatives
on the educational level to try to reinforce what natural resources mean to that
country. Their federal government — and I am by no means an expert on this — has
promoted a lot of literature and study into the issue of social licence and how
to get their messaging across.

To give an example of a country that is a bit of a parallel to us and that
has done some interesting work on the education side, I might look to Australia
and to the Australian federal government.

Senator Runciman: Senator MacDonald referenced the St. Lawrence Seaway
earlier. If the project was proposed now, I would fight it tooth and nail. It
has done so much environmental damage and it has never met its economic
objectives.

I was curious about a number of things here. My point with the St. Lawrence
Seaway is that none of us wants to be seen to be proposing efforts that in some
way do harm environmentally or otherwise. You referenced earlier the corporate
social responsibility and emergency response provisions that the NEB is now
incorporating, I gather, in their public interest test. I think that is
appropriate.

You talked to Senator Boisvenu about the Montreal mayor and about other
mayors in the province, but Quebec has also said the project can't go ahead
without passing a provincial environmental assessment. It is creating a
duplicative process. I am not sure what is happening in that regard, but I would
be interested in hearing your views about the uncertainty that that generates,
basically on the validity of that position as a lawyer.

Mr. Ross: There is no doubt that the National Energy Board has
jurisdiction over interprovincial pipelines and, in particular, whether to
approve or deny, as a condition of that, pipeline approval.

Within that context, however, there is some role for provinces — Quebec, as
well as Ontario. The Ontario Energy Board did a significant review of its own in
respect of Energy East. There are areas where there is provincial jurisdiction —
that is, things within provincial borders — such as operational safety within
the context of a particular province and environmental requirements.

Notwithstanding this one-window approach clearly at the federal level, unique
environmental aspects within a particular province would be things that would be
subject to provincial jurisdiction, notwithstanding that the overall approval of
a pipeline or cross-border infrastructure would rest with the federal
government.

Senator Runciman: When you look at provinces, I think you mentioned
British Columbia, Ontario and Quebec. Perhaps I am misjudging this, but with
respect to British Columbia and Northern Gateway — and I think Premier Wynne has
made comments about this — what's in it for us? How do you view that approach
and what kind of deterrent does that present?

Mr. Ross: From a legal perspective, some of those "what's in it for
us'' statements are extra-jurisdictional or are not within a legal context.
Those are certainly very live political pressures. They are pressures that I
think can be brought to bear, especially if there is a provincial element that
has to be looked at underneath a federal approval. In and of themselves,
provinces can intervene in a National Energy Board hearing; they can certainly
intervene in the court proceedings that might follow them on appeal. However,
there is no aspect under the National Energy Board legislation that says that
the NEB has to consider what's in it necessarily for British Columbia. In fact,
in some ways it's the reverse, where they have to look at it from a broader
national perspective to determine whether or not a cross- border pipeline is of
interest to the country.

Senator Runciman: We appreciate that, but if the provincial government
remains adamant, that presents challenges, I would think, in terms of how you
proceed.

Mr. Ross: Yes; it does.

Senator Runciman: I want to quote something that ties in with what is
happening at the federal level. I think this is from your blog. It states:

It is the Government's view that it is only by regaining Canadians' trust
in the regulatory process that any resource project will be approved.

I'm attributing that to you, but perhaps you're not the author. However, it's
from your firm.

Mr. Ross: We have some very good articling students who probably wrote
that.

Senator Runciman: With respect to the government's view on regaining
Canadians' trust in the regulatory process, has there been any polling on that
that you're aware of? Do you have any sense of the broader Canadian public with
respect to the fact that there has been a real effort to persuade them that they
should be concerned? I'm just wondering if there has been any measurement of how
significant those concerns are.

Mr. Ross: There probably is, but none that I am aware of.

One of the things I would say in defence of our federal and provincial
regulators, energy or otherwise, including the CRTC and others, is that in this
country we have a robust regulatory oversight system and good regulators. My
view of the National Energy Board is that they are excellent. They are highly
technical people and have processes in place that ensure excellence. Without
doubt, notwithstanding what a poll or special interest group may say, we have
excellent regulators in this country, both in energy and in other industries.

For some reason, and it hinges on this concept of social licence, and there
may be other things baked into it — for example, the Internet has a role to play
in disseminating opinions or views that may or may not be accurate — I think
some generational shift is happening. There is some general distrust going back
to Occupy Wall Street and one- percenters and all that stuff that works against
corporate project development generally. I think there is a broad array of
factors whereby there are challenges out there or people that think that the
regulatory system may not necessarily work for them.

Senator Runciman: I know you were responding to Senator Boisvenu about
the fact that the government can't be seen as a cheerleader, and I agree with
that sentiment, but in terms of public perceptions, I don't think the government
can play a significant role here in explaining to the Canadian public how
significant the impacts are in terms of the future economic well-being of this
country.

It seems to me that the people who do have an interest in this should get
together and start delivering those messages that we saw during the free trade
debate where industry played a significant role in that election campaign in
terms of getting the message out about the benefits of free trade. I have talked
about this before at this committee in the sense of foreign funding. We know
that significant foreign monies are flowing into this country to ensure that the
oil never gets out of the ground. It seems to me that it is incumbent upon the
folks who care about this country and care about seeing the economy prosper and
grow to look at being more activist in getting their side of the story out to
all Canadians.

Mr. Ross: I think that is right. The free trade example is a good one.
I think there are fine associations that do work in this area. CAPP is a good
example, and the Quebec Oil and Gas Association is another one.

Senator Runciman: They are doing it individually, though. With free
trade, they got together.

Senator Unger: It is very interesting but, I will admit, more than a
bit depressing.

Senator Runciman touched on a question that I intended to ask, which was
whether you would comment on the role that the U.S. foundations have played in
funding environmental activists and the subsequent devastating impacts on the
industry and, in particular, the oil sands.

Mr. Ross: That's probably beyond the scope of what my co-written paper
spoke to, which was largely legal in nature.

When we are looking at social licence and opposition to energy projects,
increasingly, to your point, we live in a very global world where we have people
over the Internet organizing in various parts of the world, be it a financial
organization or Earth Day, which was just outside us today. As with many things,
we live in a very global world. As policy-makers, regulators and lawyers working
within that context, we have to realize that we don't just live within our own
country anymore when it comes to some of these very sensitive issues.

Senator Unger: Has that globalization led to increased resistance to
projects like this?

Mr. Ross: I would say it certainly may have. Other parts of the world
may view energy development differently than we do. They may not have a vested
interest in it in the same way we do. It may be that we are seeing the result of
influences from other parts of the world or just a broader conversation
internationally about what's happening in Canada. However, there may be other
parts of the world that are viewing, for example, our new commitments to
greenhouse gas or what we're doing on environmental safety and have done for
many years in a positive light as well. It may cut both ways, too.

Senator Unger: One last question going back to social licence, and I
thought about this a lot and wondered about its genesis and where it started. I
would like you to comment. A previous witness spoke about the great challenge in
dealing with First Nations. Chief Helin, who is part of the group proposing the
pipeline north from Fort McMurray and then across the territories, I believe, to
tidewater, discovered to his frustration that there may be competing voices
within his own community who do not recognize his right to speak as their chief
or even the current council. The advice was it would be helpful to have a joint
monitoring arrangement, subject to a prior vote at the community, where the
leaders are authorized to speak, and the chief, essentially, can't be cut off at
the knees.

This is taking social licence to a point where if I were in the business, I
would say, "I have had enough; I can't do this anymore.'' I am afraid that is
what is happening.

Mr. Ross: First, by no means am I a First Nations legal expert or
First Nations community expert. My thoughts on it ought to be viewed with that
value.

I have a couple of things to say, though. It reinforces a lot of the
complexities in First Nations communities that are reflected in many other kinds
of communities in terms of views on infrastructure and natural resource
development.

With respect to Aboriginal communities in the context of social licence,
there is a difference. Aboriginal communities do have constitutional rights.
They do have rights of consultation that are well established in courts.
Therefore, that scenario is different than social licence, which is purely an
extra-legal or extra-jurisdictional question. That is not to say the interest of
Aboriginal communities don't flange up with other people that want transparency
or safety or a number of things that would fall into social licence concerns. I
think it is a point worth raising, that there is under Canadian law different
requirements on consultation and a different constitutional framework for First
Nations groups.

Senator Unger: How do we put that genie back in the bottle?

Mr. Ross: The social licence genie back in the bottle?

Senator Unger: Yes.

Mr. Ross: I think there are a couple of fundamental ways. One is to
try to take a hard look at what is and is not working within our regulatory
system and how it might be impacted. Some of that was a bit of a conversation
with Senator MacDonald and me about reinforcement of rights to be heard and of
corporate social responsibility principles and a re-examination of cabinet
approval. Those kinds of things may help.

It is also an educational piece. Senator Tannas and I talked about what other
countries are doing. I think part of that educational piece is not just that we
have robust systems but what our energy industry means for the country across
the country.

Senator Eggleton: A previous witness before the committee said that
recent changes mandating the National Energy Board to consider upstream
greenhouse gas emissions might be a stretch of federal authority. However, in
2005, based on its power to regulate toxic substances as an aspect of criminal
law, the federal government added six greenhouse gases in Part 1 of the Canadian
Environmental Protection Act.

First, do you agree with that assumption, that it might be a stretch of
federal jurisdiction?

Second, with the inclusion of greenhouse gas emissions in the NEB process,
how do you think that will affect the issue of social licence or social
acceptance?

Mr. Ross: Thank you, senator. I would absolutely agree that it would
have a jurisdictional impact, and this refers to the interim rules of the
current government that came out I think it was January 27th of this year or
something along those lines. As I understand it, their proposed approach is to
look not just at direct but also upstream greenhouse gas impacts of a project. I
think that would be problematic from a jurisdictional perspective. Upstream
projects are within the purview of provincial regulators. Take, for example, an
upstream oil and gas facility in Alberta. It is very much within the ambit of
the Alberta energy regulator to review that project, to make a determination on
that project, so there would be an overstepping of jurisdiction, in my view,
almost certainly.

Senator Eggleton: Even though the toxic substances approach was taken
by the government?

Mr. Ross: That's under the Criminal Code, which would be a bit of a
different approach.

Senator Eggleton: But it resulted in an amendment to the Canadian
Environmental Protection Act. Okay, I just want to make sure —

Mr. Ross: I think the federal government at the time was probably able
to do that because it was within the scope of federal legislation, but, if the
National Energy Board were to start taking a look at upstream greenhouse gas on
projects that have already been approved by the provincial regulator, I think
that would be an overstepping of jurisdictional bounds.

Senator Eggleton: As they are now putting it into the NEB process, how
will that affect the social licence, do you think?

Mr. Ross: I suspect they are going to get a number of jurisdictional
challenges and spend a lot of time in court before we get to the question of
whether it impacts social licence.

In terms of the impact to the views on whether environmental concerns are
being taken into account, I think environmental protection legislation, safety
legislation, thinking, for example, of the Pipeline Safety Act enacted in 2014 —
I think the Pipeline Safety Act, in terms of its approach to pivot towards a
polluter-pay, longer limitation periods, those kinds of things, might be a
question of, did that facilitate social licence or not? I think the jury is
still out on that, but I think some of those increased protections in the
Pipeline Safety Act, which I understand the current government will be keeping
in force, largely, are the kinds of things that might help.

Senator Eggleton: I can't remember which government put it into the
effect, whether it was the last government or the one before.

Senator MacDonald: I want your opinion or your advice on something,
Mr. Ross. As a proponent of a pipeline, I see that moving bitumen by pipeline
provides royalties to the provincial governments and tax revenue to the federal
government. It generates employment and economic growth. I'm sure you're aware
that there is a lot of discussion lately about contracts to Saudi Arabia. It
would give us the opportunity to move Saudi oil from Canadian refineries, which
would meet our human rights concerns. These are just some things, off the top of
my head, that I think are advantageous, besides the obvious safety advantages of
a pipeline. Is there anything you would add to that list? If you were advising
the federal government and trying to expedite this process, what would you
advise? What would you add to this list?

Mr. Ross: I think you've probably hit on the things that are topical
in terms of some of the advantages of having a pipeline in place. As I've said,
I think there are educational, promotion types of things the federal government
can do.

There is an understanding, more broadly, of the energy industry, how it's
regulated, how safe it is, that would be part of that discussion as well at the
federal level.

The Chair: Before giving the floor to Senator Pratte, I would like the
members to stay around. We're going to have a short in camera meeting to talk
about future business and the agenda for the next few weeks.

[Translation]

Senator Pratte: With regard to social licence, there is something that
I still cannot fathom despite hearing about it for some time, and that is how we
define the presence or lack of social licence.

[English]

It seems to me that when we rapidly conclude that there is no social licence,
that is when there is a lot of noise and controversy over a project. So in the
case of a pipeline, it's sort of obvious that environmental groups will be
against a pipeline, an oil pipeline, for obvious reasons. They have their
reasons, and it's their right to be against the pipeline. We know why they are
against the pipeline, and they will go in front of the NEB and make their case
very intelligently. They will convince part of the population, and we will see
that in the polls.

But does that mean there is no social licence? What does it mean that we say
there is no social licence? Does it show in the polls? What is the result that
we will see in the polls that will show that there is no social licence or that
there is social licence? Does the provincial government in Quebec or in B.C.
define that there is or there is not? Is it 50 per cent plus 1, or is it 30 per
cent or 35 per cent? Or is it the mayor of a large city, in Montreal, that
decides that there is or there is not? The answer to that is crucial in my mind,
because then it also changes the role of the national government, for instance,
because, of course, if we say that only the environmental groups or the mayor of
one or two small cities are against the project, it could make a lot of noise,
but the federal government could decide that the project is in the national
interest and decide that it has a right to decide that the pipeline will go
ahead.

But, if it's 60 per cent of the population in a province or two provinces,
then it changes the game. So what is the standard? Is there a standard that is
defined somewhere that says social acceptance is granted or not?

Mr. Ross: Senator, if only it was that easy, then we could get 50 per
cent plus 1 or —

Senator Pratte: It could be a complicated standard, but is there a
standard somewhere?

Mr. Ross: I'm not sure there's a set standard in any academic research
or anything like that, but I guess I would revert to Senator Unger's point: Is
there a cause for optimism in this? One of the things that is indicative,
perhaps, of social licence is the fact that, for a long time in Canada, we've
had a lot of natural resource towns and communities right across the country. In
Quebec, there are a lot of mining communities. In Alberta, we have communities,
notwithstanding where the economics are now, that have had a very successful
community relationship with natural resource production in terms of overall
acceptance of it, overall community build around it. Part of social licence is
less a question of whether it's 50 per cent plus 1 or 68 and a half per cent or
39.2 or whatever, but whether you are having communities that are engaged and
operationally accepting what's happening. I think that may well be true. It's
harder to do on a linear project because you have resource in one part of it and
maybe less engagement or less interest in a linear project in other parts of the
country, but I do think that that sort of broader notion of optimism about the
ability of communities to at least be accepting of projects is probably more
where I would view any positivity around social licence, rather than whether we
need to get to a certain threshold. I think there is probably an element of
that, too.

The Chair: Thank you, Mr. Ross. The committee appreciates your sharing
your conclusions with us. We thank you for your presence with us.

Members, I would really appreciate maybe two minutes to go in camera. It will
only be a few minutes, depending on how much you want to debate future business.